Article ID Journal Published Year Pages File Type
981938 Procedia Economics and Finance 2013 10 Pages PDF
Abstract

Growth orientated policy schemes as well as future energy policy must be, to a large extent, concerned with transportation fuel issues. In particular, sustainable growth rates require, among other things, a substantial substitution process, in which biofuels, hydrogen, or environmentally friendly generated electricity substitute for fossil fuels continuously. In this paper we model this substitution process by incorporating both, a non-renewable resource and a renewable resource, which can both serve for producing transport fuels, into a conventional Romer-type endogenous growth model. Moreover, as a prominent feature of the modeling we also capture the fact that biofuels production may compete with food production for arable land. The main results of the paper, the Keynes-Ramsey rule, the modified Hotelling rules for the renewable and non-renewable resource, and the fuel versus food trade-off are discussed in some detail. Numerical simulations of the model are illustrating the main results.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics